Synopsis:

Goldman Sachs expects the Bank of Japan to maintain its current policy at this week’s meeting, as the recent yen weakness aligns with fundamental shifts, reducing urgency for intervention. Intervention risk might increase if USD/JPY approaches 160, while the US election’s uncertainty could offer some support to the yen due to its safe-haven status.

Key Points:

• Policy Outlook: Goldman economists anticipate no policy change at the BoJ meeting, as current USD/JPY movements align better with fundamentals compared to previous deviations.
• Intervention Risk: While similar to conditions before the Ministry of Finance’s last intervention, intervention is only likely if USD/JPY rapidly approaches the 160 mark.
• Election Impact: USD strength amid rising US election risk premiums is affecting multiple currencies. However, the yen’s safe-haven appeal could support it if US policy uncertainty weighs heavily on sentiment.

Conclusion:

Goldman Sachs expects the BoJ to hold its current stance, with intervention unlikely unless USD/JPY hits 160. The yen may see some support from its safe-haven status as US election uncertainty unfolds, although major policy moves from the BoJ remain improbable in the near term.